Demonstration project seen as model for ACOs

The Medicare agency heralded a test program Monday that it says will serve as a model for healthcare reform's accountable care organizations (ACOs).

The agency said it has seen strong results from a five-year demonstration project with goals that are similar to ACOs' — lowering costs by improving quality and shifting away from paying doctors to perform more procedures.

The demonstration program involved 10 large, integrated healthcare systems. Seven of the 10 met all 32 of the program's quality benchmarks, the Medicare agency said in a release. And all 10 agreed to participate in a two-year supplement to the initial demonstration project.

“As we work to help bring care coordination to a broader set of providers through accountable care organizations, the lessons learned by this demonstration provide great insight into how to use Medicare’s payment systems to improve quality while reducing costs,” Medicare administrator Don Berwick said in a statement.

Most of the organizations that took part in the demonstration project, however, have voiced serious concerns about the proposed structure of ACOs.

Nine of the 10 health systems involved in the demonstration signed a letter in May saying they might not participate in the ACO program unless the Medicare agency makes major changes to its initial proposal.

The clinics said they all supported the concept of integrated, coordinated care, but that, "as currently proposed, ACOs have a greater potential for incurring losses … than for generating savings."

Both ACOs and the five-year demonstration project are designed so that participating organizations can share in the savings they generate for Medicare.

Medicare has paid roughly $110 million to seven of the 10 participants in the five-year demonstration, according to a release. Four groups participating in the two-year extension will receive payments of roughly $30 million, out of a total Medicare savings of $36 million.

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